Mrs. Yellen was also scheduled to address the Senate Banking Committee February 13 as part of her twice yearly report to Congress, but it was postponed.

At the House hearing, Representative Bill Posey (R-Fla.) and Representative MicheleBachmann (R-Minn.) not only pressed Mrs. Yellen on what she’d think of Paul’s bill if it were operational, they also touched on monetary policy—the Holy Grail of Fed operations.

Mrs. Yellen’s demeanor noticeably changed when that sore spot was exposed. She made it clear that in no manner whatsoever would the Fed ever allow an in-depth government audit to “second guess” the sacred monetary policy conducted behind closed doors by the Fed’s Open Market Committee (FOMC).

That committee publishes minutes and a basicschedule, but even presidents and Congress memberscannot attend FOMC’s meetings. The Fed calls that “independence,” which it certainly is. Butcritics say that deciding how much money entersthe economy, and under what terms, is a critical piece of the Fed’s actions that needs to be muchbetter understood and closely watched, not hidden.

Posey called Paul’s audit bill “the most-sponsored bipartisan bill” that’s been put before the House in recent memory. It passed the House with flying colors in mid-2012 but was blocked in the Senate. Paul’s son, Senator Rand Paul (R-Ky.), reintroduced it in the current Congress as S. 209. A similar bill is parked in committee on the House side.

An unavoidable question is thatif Bachmann and Posey think an audit is soimportant, then why don’t we see more action onthese ready-to-go audit bills?

When Mrs. Yellen indicated that she finds it hard to believe Congress may not fully trust the FederalReserve, Posey shot back: “Some of us believe in the adage ‘trust but verify.’”

He told Mrs. Yellen that federal agencies aresubjected to government audits that the Fed somehowavoids, apart from sundry audits conducted by private accounting firms. Why not the Fed?

Posey stressed to Mrs. Yellen that Paul’s auditbill limits itself to “post-decision audits.” Thatmeans that individual Fed actions, including those taken by the FOMC, would not be second-guessed.Posey thought that condition would cure Mrs.Yellen’s jitters about elected officials looking over the Fed’s shoulder when it devises and implementsmonetary policy.

He was mistaken.

While Mrs. Yellen made a throw-away remarkthat perhaps the Government Accountability Officecould visit the Fed and read its meeting transcripts, she kept returning to the same-old Fedboilerplate that “political” intervention (read: publicinput or real accountability) is not welcome at the Federal Reserve.

“An audit is different than second-guessing policyjudgments,” she stated with a faint hint of contempt.

As if reading a script, Mrs. Yellen repeated that the Fed’s assigned duty is to “maximize sustainableemployment and price stability.” She added:“[Keeping] inflation running well below 2% is ourobjective.”

Mrs. Bachmann, who also pressed Mrs. Yellen about her view of an audit, stressed that there isgrowing public criticism of the Fed. She asked how struggling Americans could ever hope to haveany control over their often gloomy economic destiniesif the Fed insists that a real public audit is unacceptable.

Mrs. Yellen only replied that committee hearingslike this one were pretty much all Americans andCongress could ever hope to have in terms of influencing or in any way trying to steer the Fed.

Among other things, Mrs. Yellen said the Fedhas plans to carry out “proposed rulemaking” toaddress highly risky ventures engaged in by banks. This was in response to a question on why mostbanks engage in elaborate investments withoutproviding a practical benefit to the productive sector. She added that the Fed would cooperate with the Securities and Exchange Commission, whichshe feels has more authority in this respect.

She also declared the dollar is stable and will alwaysbe the world’s reserve currency. But shemade that statement while largely avoiding the question of what the Fed would do if the dollarloses its reserve status amid nations increasinglytrading with other currencies.

She casually dodged the statement by Representative Brad Sherman (D-Calif.) that “we need Jimmy Stewart banking back in the U.S.” He was referring to the community-friendly banker played by Stewart in “It’s a Wonderful Life.”

Sherman is concerned that the Fed is too tolerant of banks that only loan to large interests and deny loans to small business owners.